Thread: Anyone ever had problems with payroll and cash flow?

No way. If one of those 5 dumps you, thats a huge dent in your pocket. 500 is more of a headache, but more of a steady income.

Agree with you here. Can't keep eggs in one basket. Commercials will jump ship for 10 bucks. Some companies its a policy to go with low bidder regardless if you did a great job last contract. I keep 90 days cash on hand. That means if cash flow stopped today I could cover operating expenses for 90 days. Think of it as corporate rainy day account and any company with employess needs that kind of safety cushion. Now you need to deal aggressively with slowpays. I found prepay to be most effective. Late fees and other threats don't mean much to those people. Its simple, no pay no service. Send out a blanket letter outlining new terms. Send it to your problem people. If they bail they saved you the prob of dumping them with a balance owed. If you need to trim payroll after the dust settles than so be it. It sounds like the OP is hand to mouth himself and may need to look in the mirror for savings.

This is the correct answer to the OPs question. I would also set up a line of credit with your bank.

Cash on hand is best. Ask Procut about the pitfalls of using lines of credit. When the economy tanked the bank froze his line and converted it into a loan with outrageous monthly payments. Not that he did anything wrong, the bank decided to limit its exposure. That's an instant out of business sign right there.

Cash on hand is best. Ask Procut about the pitfalls of using lines of credit. When the economy tanked the bank froze his line and converted it into a loan with outrageous monthly payments. Not that he did anything wrong, the bank decided to limit its exposure. That's an instant out of business sign right there.

Properly managed LOC's are just fine. If you read everything that Procut said, it was more his fault than the banks. He was taking a ton of cash out of the business and not paying down debt.

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Having a LOC is a great way to bridge the gap during busy times when A/R is large and payables are coming due. Have seen alot of business owners get in trouble when they start funding operations with the LOC.

We take out a small line of credit every April, and pay it off by the first of June at the latest.

The biggest issue for us is the initial start up in late March through April. All of our billing is done at the end of the month, so seasonal start up costs such as payroll and any equipment maintenance will eat up any reserve you have left from the winter.

But, by Mid-June at the latest, we have enough cash flow to pay off any early season debts and start socking money away in business savings.

The goal in the next two years is to be able to have an un-touched reserve every spring in order to not have to pull any line of credit out at start-up time.

My LOC is my cash account built from profit money! If your profitable you should be socking away cash, every small business runs into cash flow issues eventually, it's how they deal with it that makes the difference.

My LOC is my cash account built from profit money! If your profitable you should be socking away cash, every small business runs into cash flow issues eventually, it's how they deal with it that makes the difference.

Yes exactly. We all have tight weeks sometimes. You got to be smart and save as much when you can for problem weeks. I wouldn't even try to be in buisness if I didn't have at least 10% of my yearly sales in the bank. I seen alot of my firends try there own buisiness start up and they haven't made it, they do good work they just can't manage and save extra money.